Can Brexit be reversed?

First was the shock. It seemed as if Britain had driven off the edge of a cliff. Then denial. The dust settled and nothing much seemed to have changed. But now, among those that follow politics and business, there is a slow, creeping realisation of just how big a mess Brexit is. This isn't so much that the country has ruined itself in the long run (many believe that to be true, but a cogent case can be made otherwise); it is the sheer extent of short-term disruption. So we might ask: can it all be made to go away?

What has woken people up to the depth of problem is the government's proposal to trigger Article 50 of the EU treaty in the first quarter of 2017, which leads to the country's departure two years after that. That is not near enough time to put in place new trade treaties, and handle a host of other issues (who pays for British nationals' medical bills in Spain? How do we manage the Irish border? And on, and on) all at once, given that this is all a matter of negotiation, and negotiations always go to the wire. That means that many businesses with an international dimension (not just exporters - anybody using imported parts or services from anywhere outside the UK) could hit a wall of confusion in 2019.

What makes this worse is the realisation that the split is going to be more "hard" than "soft", for the reasons I explained in my recent blog. Remain supporters desperately argue for some sort of middle way that protects trading relationships - but no compromise deal looks anything like as good as the real thing, membership with the layers of concessions that Britain had accumulated for itself over the decades. So can we call the whole thing off?

The problem is that as soon as Article 50 is triggered (which astonishingly the government claims does not require a parliamentary vote), then it becomes very hard to come back. The government would have to negotiate re-entry from a very weak position. Such concessions as Britain's contribution rebate would become an obvious target. So something needs to happen before that. Any hopes must largely rest on a court case challenging the government's right to invoke the article under royal prerogative. If the government loses, then parliament has the opportunity to throw a spanner in the works.

Could the government fail to find a majority to push through Article 50, if it was forced to? Its majority is small, though some of the Irish parties would support it on Brexit. A rebellion from its backbenchers, or even ministers, is certainly feasible. But would Labour turn up with enough numbers to back them up? In the old days that would have been quite a safe bet. The party in opposition loved nothing more than to make mischief for the government, regardless of the rights and wrongs of the case at hand. But the current party leadership seems little interested in such games. There would need to be strong political reasons to galvanise both Labour and any Tory rebels.

What might those political reasons be? Remainers are trying to build a case around the idea that the Brexit vote did not amount to a mandate for the "destination", or what replaces EU membership. This is weak. It suggests consultation just on the question of what type of Brexit we want - a choice between a miserable compromise or a highly disruptive major break. But the best alternative to hard Brexit is to overturn the referendum result itself. For that, something needs to happen to shake confidence in the referendum mandate.

Alas there is little sign of that. The lies peddled by the Leave campaign (most notoriously the idea that £350M would be available to spend on the NHS if we left) are being shrugged off, and set against some of the Remain campaign's claims, such as that a Leave vote would lead to a draconian emergency budget. But something might blow up in the next six months and catch the public imagination. Or it could be financial instability, which is surely a possibility given the huge uncertainties and the country's dependence of foreign finance. The wobbling pound is so far the only real sign of trouble - what if it keeps wobbling?

But these are thin pickings for people who support UK membership of the EU. It seems that the slim majority for Leave in the referendum, now routinely described as "overwhelming" by its supporters, has been the basis of a coup, which disenfranchises people like us. The people were consulted, and now the political elite has reasserted full control. The irony, of course, is that the Leave campaign was based on the slogan "take back control", and appealed to voters who felt disenfranchised by political elites. No student of political history will be surprised that it is being used to consolidate elite power, albeit with some change in personnel.

There seems to be little that Remain supporters like me can do. It will take a feeling of betrayal from within the Leave camp, and a split, in order to give the idea of reversing the referendum result any traction. Unfortunately, if this ever happens it is likely to be too late.

So we must channel our anger into rebuilding the forces of liberalism for the long term. And we need to focus on two problems in particular. How can we give people a greater sense of political control over their lives, while enjoying the opportunities that global connections provide? And how should European institutions be reshaped so that they better serve European people, and so that one day, we may persuade the British people to rejoin? Meanwhile we must watch helplessly as a slow-motion disaster unfolds. "Told you so," are the most unsatisfactory words in life, but I fear that it is all we are left with.

15 thoughts on “Can Brexit be reversed?”

I guess the problem for ardent remainers is that if they work to make the UK the vibrant economically successful place it could well be they are undermining their own “we’re all doomed” argument.

Of course, the future could be bleak indeed if the wrong sort of economic policies are pursued. But that’s just as true for a UK within the EU as without.

Just imagine how bad things would be now had we listened to those ardent europhiles who’d wanted to join the euro some 15 years ago. That would have been a disaster for a net importer like the UK. The economy would be in a far worse state than it is in now. There probably wouldn’t be an immigration problem for the simple reason that there wouldn’t be any reason for anyone to move here!

The big problem, as I see it, for the next decade is the successful management of what is a huge bubble in the housing market. Deflate it too quick and we have lots of bankrupt owner occupiers. Don’t deflate it at all and housing remains far too expensive for young people.

Doubtless the fall out from all that, and there will have to be some, will be blamed on Brexit even though the problem has been allowed to worsen while the UK has been a member of the EU.

I think you are being a tad superficial there Peter. The problem for ardent Remainers is that their vision for a prosperous UK was very much as a full member of the single market. They struggle to understand how we get to be a “vibrant economically successful place” without it. And that is pushing many of them to try and find a middle road. It requires quite a shift of imagination to understand how to make the best of the new position. That is what we have to do, of course – rather than simply spouting “told you so” as the transitional chaos unfolds.

And as for your counterfactual speculation as to what might have happened if the UK had joined the Euro, that really doesn’t deserve comment. I could paint an equally plausible counterfactual that joining the Euro would have reduced the depth of the financial crash for both the UK and the euro zone. Neither contention is provable. For the record I wanted Britain to join the Euro, but not at the ratet that was on offer in the early noughties, which would have required a painful period of readjustment in the medium term.

This is, even if Leaving were to be abandoned at this stage, would the opt-outs and rebates and so on be safe?

I didn’t think it was necessary to have the referendum — I thought all we had to do to get out of the EU was wait until it started to fall apart on its own, which is inevitable one of these crises. But having called it, it was necessary to vote Leave because our special, favoured position had only been possible because of the strength of Eurosceptic public feeling in the UK which allowed successive Prime Ministers to demand extra concessions ‘or I won’t be able to sell this to the British people’.

If we had voted to stay — or, worse, if we vote to leave but then bottle it at the last moment — suddenly we are sending future PMs naked into negotiations with the other EU members. How can they carve out the best deal for Britain if the nuclear options, the UK leaving and taking down the whole project, is now off the table and known to be off the table? We’d have called our own bluff.

The rest of the EU would almost certain immediately try to reduce the size of the rebate, and when the PM, whoever it was, said, ‘No hang on, we want to keep getting our money back,’ they’d laugh and say, ‘Or you’ll what? Huff and puff about leaving again but ultimately stay because you know that leaving would be too hard?’

So we’d lose the rebate, probably gradually rather than all at once but we’d still lose it, and our other special privileges would inexorably go the same way.

So having set our face to leave, we must leave.

Otherwise we are like the abused wife who declares she is going to get out, backs her bags, and at the last moment fear gets the better of her and she stays — and from that moment on her husband knows he can do whatever he likes to her, because no matter how much he beats her, or how many snide little put-downs he inflicts upon, her, she has shown that she will never have the courage to do the right thing and walk out the door.

If you view the EU as a zero-sum game with all countries jostling for advantage over each other, then clearly we should be out and stay out. Obviously I have never viewed the EU that way and I don’t think that Britain’s generally Eurosceptic attitudes actually helped it much in its dealings with the EU over the long run, though the rebate was a tangible benefit. Still, trying to come back in after this fiasco would be awkward to say the least.

Going back to the the Independence of the USA in the 17th century, we can see how it is possible for a smaller economic entity to break away from a larger one and do much better for itself. In more modern times we have Singapore doing well after breaking away from Malaysia.

It all seems quite natural now. But, at the time many Americans were fearful about breaking away from the British Empire. That concern helped create the country we now know as Canada. In fact many Americans who were opposed to US independence migrated northwards after independence.

The arguments at the time wouldn’t have been dissimilar to the ones we’ve just had about the EU. They would have involved tax, laws, democratic accountability, trade, and sense of identity too.

So was Leave a better option than Remain for the US colonists? We’ll never know. Remain was a reasonable option for Canada after all. But Leave was viable too. Often we are faced with the choice of two quite viable options. There’s no need to spit the dummy, or throw the rattle out of the pram, just because we happen to be in a minority and things don’t go exactly our way.

Maybe Scotland will become the new Canada and many remainers from south of the border will prefer to move there! 🙂

I have been quite careful not say that Britain will not be able to find a prosperous future outside the EU. I just think that the journey is going to be much harder than Brexit campaigners suggested. And yes, I am bitter about some of the false claims made by the Leave campaign, and I want those that made them to be held accountable. I am not convinced that if the public had a clear understanding of what was involved that we would have had a majority for Leave. That’s politics and I am trying to keep the toys in the pram.

Singapore did well by becoming a virtual dictatorship and it was effectively cutting itself off from its hinterland (so more applicable to London and the SE going alone); Another example of a breakaway was Ireland. It fared very badly on its own until it found the answer to its isolation in 1973. It have never been able to afford a proper social democratic welfare state. Britain is different, of course.

It was one of our favourite parlour games to choose where we would live in the event of Brexit. Alas I think Scotland is trapped and will not be able to escape. Denmark was my favourite. I really don’t like the bitter, narrow place this country is becoming – though I’m not talking about you!

Here’s an analogy: The company you work for organises a Christmas dinner, but whoever’s in charge decides that everybody is going to have roast turkey. You tell the organiser that you don’t like turkey, you would prefer fish, and you are told that if you don’t have the turkey, you will get the sack. You have many friends among your work colleagues – what do you do?

Well, I think you have to leave, because this level of coercion is not acceptable.

The remain campaign’s thrust was: eat the turkey! – because you have friends in company (the cultural identity argument) and life will be hard if you lose your job (the economic argument).

The very argument that it will be so hard to leave the EU suggests to me that there is coercion going on, making it important to get out.

I know it’s unpalatable that ‘taking back control’ means putting our country at the mercy of the Tories, but at least they aren’t putting up huge administrative barriers to a change in government.

I don’t believe this country need become a bitter and narrow place – but it needs the remainers to stop sulking and get on with spinning a ‘friends not family’ narrative.

So, Richard, you are the type of person that goes up to a friend who has lost their life partner and is all over the place, and tells them to just pull themselves together, stop sulking and get on with life? The sense of loss to many Remain supporters is of a similar type. They do not see what is going on in terms of your analogy. They think that the company organising their dinner has told them that all not-British dishes are off the menu, and their non-Briitsh work colleagues can’t come. And to stop being unpatriotic if they protest. They do not see extra choices and freedoms but the exact opposite. They see their life possibilities being narrowed, and their friends being told they are unwelcome. They see their supposed democratic representatives stoking up the forces of darkness, leading to a rise in violence. They see a pressing need to oppose the narrow, oppressive narrative being put forward by the government to be challenged – lest their country is stolen from them without their consent. And they feel that all this has come about through a process that was founded on lies and would not pass many people’s definition of democracy. This is an emotional business and it really doesn’t help to be told to stop sulking or you will make things worse. You can’t have loss without grief. You can’t pass through grief without anger. This debate, this “sulking”, is a necessary part of the country coming to terms with itself. The Brexit majority (if it still is a majority) need to know that the other half have feelings, interests and rights too.

Ok, it’s unhelpful to telling the grieving to ‘stop sulking’. What strikes me is the gulf between our interpretation of what has actually happened. It is revealing how our two analogies differ.

In mine, “the company” was the EU, which was presenting a coercive agenda to “the employee”, which was Britain.

In yours, “the company” is the British government, which is pushing through a coercive xenophobic agenda against “the employee” who is the British citizen – using a dodgy referendum as its mandate.

I personally feel more culturally aligned to the top brass of the EU than to the tory government, I imagine you do too, but for me there is an issue about democratic process going on here. Our Brexit referendum was dodgy for sure, but what about the referendum in which the people of Europe decided to make free movement a fundamental principle? It wasn’t dodgy because it never happened – I actually don’t know who made that decision, yet alone who elected them.

Yet it’s a subject many people feel strongly about – not just in Britain, certainly in France and Poland, probably in Germany too. Should that choice have been made without a referendum? When the people of one country express doubt about that principle, the country is told to shut up or get out – don’t you sense coercion?

I am worried by the choices of the EU top brass, while your worry is about the current British government. I dislike what the Tories stand for, but until they scrap parliamentary elections, I still feel I have democratic choice – maybe Labour, the Liberal Democrats or even another opposition will eventually give me new hope.

You have discussed the tension between free trade and democracy. Are we not disagreeing about where the balance between them should be struck?

There is a conflict as to what the state is for. There is one vision that it represents and environment of rights through which individual citizens then express their choices. There is another where it represents the will of the people, or a majority, to act, including to limit the freedom of the individual. The EU is firmly built on the first model (as is the USA). But the vision many have of the British state, left and right, is more in the second camp. In one case the EU is seen to strengthen the values of liberal democracy (by limiting the arbitrary power of the state) and in the other it is seen as undermining it, by blocking the will of the people. We are condemned to hold these two ideas in permanent tension. Both can be overdone.

The freedom of movement idea was close to the heart of the original EU project, and so receives its legitimacy from the off. It was reinforced by the single market and Maastrict Treaty of 1992. Quite a few countries had referendums on that, including France. In Britain there was a furious argument as to whether we should follow suit, but the PM (John Major) said that parliament was the pinnacle of democracy. There then followed a series of extremely unseemly parliamentary manoeuvres to get the legislation through. What, I suspect, the French you are talking to actually resent is not freedom of movement, but letting in the countries of central and eastern Europe. For the latter, these countries often held referendums, and freedom of movement is seen as one of the main attractions of the EU. Thus the paradox that Hungary has the most anti EU government in the union (way worse than Britain’s) and yet the EU itself is more popular there than anywhere else according to opinion polls. I personally feel that allowing the post-communist states into the EU was its finest hour – a hugely helpful act of European solidarity. Alas I am in a minority.

“There is one vision that it represents and environment of rights through which individual citizens then express their choices.”

Let’s say this individual wants to have a job, a house, and educate his children. I suggest that his freedom to choose is not helpful if his opportunities are too limited. Those opportunities should be considered more collective responsibility than individual freedom.

The ‘will of the people’ may be an imperfect concept, badly expressed by government, but the EU can’t claim to be an ideologically neutral framework. With national government we get a 5-yearly crack, with the EU it’s once in a lifetime – and that was Brexit.

The way you describe the EU mandate for the free movement of people is interesting. It seems that the British people had to wait until Brexit to vote on it. As for the nations who got a referendum on Maastrict – where they not voting on a bundle of issues? Maybe the free movement issue got played off against others?

It seems that not all European nations are equal when it comes to free movement. I guess that many more think of moving from Romania to France and Britain than the other way round, for instance.

I would love it for Britain to make substantial contributions to the welfare of Romania, but a mass migration of Romanians to Britain would not be the best way. Firstly it doesn’t strengthen the Romanian infrastructure, secondly it forces many British workers to compete with those who are prepared to undercut them, in which unionisation offers little protection – back to the bad old days of the industrial revolution. Would economic mass migration be that much better than Stalin’s social engineering, with its legacy in places such as Ukraine and Lithuania? I bet that Romanians would rather stay at home, if only the opportunities were there.

Of course I’m not saying a mass migration would happen – but that was the public’s fear, which should have been addressed by the EU.

The principle of free movement is flawed, if only because it would collapse if taken to extremes. If one million Romanians decided to move to Germany in one go – the free movement law would go out the window. So, why not set a limit to yearly movement? Wouldn’t that have reassured a lot of people, even if the limit was high? To refuse to set a limit ‘on principle’ is surely an unacceptable level of stubbornness – and unworthy of a democracy. To me this is evidence that the EU leadership was so taken with its own ideology that it ceased to consider the opinions of its citizens.

I must say I personally am very relaxed about the current migration levels, but then again, I’m not working class.

Please don’t dismiss me as xenophobic, I am the only Britain I know who would like to move to Romania!

The US constitution is not an ideologically neutral framework, and nobody has voted on it ever. And yet it is still considered democratic. The EU is not a state. It has no army and no police force. Its bureaucracy is tiny – less than most single government departments, I believe. The EU has democratic structures within it. The main decisions are taken by elected heads of state; there is a directly elected parliament to offer scrutiny. This makes it potentially more democratic that the web of trade treaties that will replace it. In an interconnected world we are always subject to decisions taken by outsiders. The idea of the EU is that UK voters get to influence more of those international decisions. But that means accepting some limitations. This is the heart of the inescapably trilemma.
And what makes referendums so democratic? They were a favourite method by which both Hitler and Mussolini consolidated their state power. They try to reduce complex, multilayered decisions to a yes or no question. That is why we have deliberative, representative structures to take decisions. But we do have to protect citizens from an overpowering executive – like Hitler. That is one of the things that the EU helps us to do. The sovereignty of parliament is an idea that fills me with apprehension when it is not within a proper constitutional framework, which it isn’t in Britain.
And as for freedom of movement: it will always break down if taken to extremes, and yet it is central to pretty much all democratic nation-states, such as the USA. And there is plenty of evidence to suggest that migration from a less developed economy to a more developed on helps the less developed one. It assists culture transfer to something less corrupt; remittances are much more spread out and less corrupted than state directed aid, and the emigrants are usually rapidly replaced (there have been some very interesting studies on this) aiding social mobility in the less developed state. What we have got wrong is (in Britain) not helping the unskilled sections in the more developed state – which we could easily afford to do. That is a failure of the member states rather than the union. Meanwhile our own citizens benefit greatly from working abroad, and draw great pleasure from taking up permanent or temporarily in other states. In my view all we were doing in the referendum was scapegoating the EU and foreigners for deeper problems in our governance. Perhaps exit will help us confront those deeper problems. We can but hope.

“The wobbling pound is so far the only real sign of trouble – what if it keeps wobbling?”

It isn’t actually wobbling. It’s changing in value. That’s what is supposed to happen to a freely floating non-convertible currency. The last thing any government should do is target a particular exchange rate. It’s rather an expensive exercise to try to prop up the pound. George Soros is rich enough as it is. We shouldn’t line his, and other bond vigilantes, pockets even more that we’ve done in the past.

When we have a high pound, our exports are always less than our imports. If we had a low pound it would be the other way around. Our imports would be less than our exports. At some value our trade balances. It has to.

So we’ve been used to having a high pound, going abroad for our holidays, and buying lots of German cars etc. I don’t remember anyone making a democratic decision about that. So how has it come about? The answer has to be the desire of certain other countries to run a continued trade surplus. The decision hasn’t really been ours at all.

When countries like Germany, Denmark, Switzerland (ie the Surplus countries) earn pounds by selling us stuff they choose not to spend them all. Instead they buy gilts which forces up the pounds value.

Have these countries suddenly decided that their surpluses are too large and they need to balance their trade? If they have then the pound might well stay down. But if they haven’t then it will go back up again as soon as all the hoo-ha dies down. The surplus countries need the deficit countries (that’s just arithmetic) and the only way to keep the UK a deficit country is to keep buying UK gilts to keep the pound high.

Presaging my most recent post. You have more faith in the rationality of markets than I do. Surprising from somebody that links to articles from people criticising economists for believing too much in the rationality of markets.

There is a rationality in markets but not in the way understood by the economic mainstream . The ‘rational expectations’ theory sounds quite implausible to me. The idea that individuals might what do what is best for themselves, or even their descendants, in the longer term at the expense of the disadvantages in the shorter term sounds quite implausible to me.

So the argument that a fiscal stimulus won’t work because super rational individuals will become concerned with rising levels of government debt and start to save more to cover future increased tax bills seems total nonsense.

But, on the other hand, if the pound falls and it becomes more economically advantageous to make steel in the UK, rather than importing it, or holiday in the UK rather than travelling abroad, then it seems quite reasonable that a degree of rationality will prevail when making these kinds of decisions.

But, of course, we should never build our models assuming a kind of behaviour which we might consider reasonable. We need to test out and measure what actually happens with real people in the real economy and build our models to fit that data. That was the point being made in the article I linked to.